Tax Break

Essential reading: Tax impact for small business hard to gauge, and more

December 20, 2012

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Tax impact for small business hard to gauge. John McKinnon – The Wall Street Journal. The latest budget offers exchanged between the White House and Republican leaders would raise tax rates on a tiny fraction of small-business owners, but would still affect a sizeable portion of business activity, studies show. Link

* Boehner seeks support for tax increase on the wealthiest. Lisa Mascaro – The Los Angeles Times. As President Obama and House Speaker John A. Boehner took turns blaming each other for the sudden lull in the budget talks, the action continued off-camera Wednesday as the Ohio Republican focused on building support from his conservative majority to increase tax rates on the wealthy. Link 

 * John Boehner’s Plan B would raise taxes on the poor. Dylan Matthews – The Washington Post. While Speaker Boehner’s bill makes permanent the expansion of the Child Tax Credit (CTC) signed into law by George W. Bush as part of the 2001 tax cut deal it does not extend an expansion that was passed as part of the 2009 stimulus package, and has been renewed since then, allowing poor families to refund more of the credit. Link

* Municipalities fight a proposal to tax muni bond interest. Mary Williams Walsh – The New York Times. The Obama administration has proposed capping the tax break that America’s highest earners now receive from municipal bonds. Analysts expect such a cap to be part of a comprehensive tax overhaul package that Congress will take up next year, under a broad fiscal framework now being negotiated by President Obama and House Speaker John A. Boehner. Link

* History lesson: Why the Bush tax cuts were enacted. Glenn Kessler – The Washington Post. George W. Bush had just been elected on a pledge to cut taxes, but his plan did not get much traction among Democrats until then-Federal Reserve chairman Alan Greenspan warned Congress of a dangerous new specter — that the government would pay down the national debt, and there would be no place to park excess funds. Link

* Boehner’s ‘Plan B’ gets pushback. Jared Favole and Damian Paletta – The Wall Street Journal. House Republicans hustled Wednesday to build support for a fallback proposal that would eliminate most of the tax impact of the “fiscal cliff,” providing a test of Speaker John Boehner’s leadership as the year-end deadline approached. Link

* Rush to close on properties by year-end. Josh Barbanel – The Wall Street Journal. Housing brokers say that in some buildings, often-finicky co-op and condo boards have held extra meetings to accommodate those seeking the lower tax rates. In the year-end wave of deals still under way, some buyers have been able to negotiate steep discounts by agreeing to pay in full in cash by the end of December. Link

* A bad budget deal. The Wall Street Journal editorial. It’s clear by now that the budget talks are drifting in a drearily familiar Washington direction: Tax and spending increases now, in return for the promise of spending cuts and tax and entitlement reform later. This is a bad deal for everyone except the politicians who want more money to spend. Link

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